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India's Office Market Stabilizes: Vacancies to Fall, Rents to Rise, Says Report

India's office market is entering a phase of relative stability, with vacancy levels expected to decline marginally and rental growth to pick up pace. A significant pipeline of new supply is underway, with around 176 million square feet expected by 2028, though actual deliveries may vary. Bengaluru continues to lead with the lowest vacancy rate, while Pune faces pressure from a large upcoming supply. Global Capability Centres (GCCs) remained a key driver, accounting for about 40% of total leasing in the last quarter.

Key Points: Office Vacancies to Decline, Rents to Rise in India: Nuvama

  • Vacancies to ease marginally
  • Rents expected to rise
  • 176 mn sq ft new supply by 2028
  • GCCs drive 40% of leasing
  • Bengaluru leads with lowest vacancy
2 min read

Office market stabilising; vacancies to decline marginally, rents to rise: Nuvama

Nuvama report forecasts marginal decline in office vacancies and rising rents as market stabilizes. Bengaluru leads, GCCs drive demand.

"Vacancy levels are likely to decline marginally, and rental growth is expected to pick up pace going forward. - Nuvama Report"

New Delhi, April 20

Office space vacancy levels in India are expected to ease slightly over the medium term, supported by improving rental growth and balanced demand-supply trends, according to a report by Nuvama.

The report said that while a large pipeline of commercial projects is underway, the sector is entering a phase of relative stability. "Vacancy levels are likely to decline marginally, and rental growth is expected to pick up pace going forward," it noted.

In the near term, however, supply may slightly outpace demand. Around 176 million square feet of new office space is expected to be added by 2028. Actual deliveries could vary depending on factors such as labour availability, financing conditions, and developer decisions. Some projects may also be delayed, which could help prevent a sharp rise in vacancies.

During the first quarter of 2026, office leasing stood at 11.1 million square feet, down 22 per cent year-on-year. Completions were lower at 7.4 million square feet, leading to a decline in overall vacancy to 13.1 per cent. This marks the tenth consecutive quarter of falling vacancy levels across major cities.

Bengaluru continued to lead both demand and supply, recording the lowest vacancy rate at 7.8 per cent. Pune, on the other hand, faced pressure due to a large upcoming supply pipeline, nearly 4.8 times its recent annual demand, making it the only major city to see a rise in vacancies during the quarter.

Meanwhile, the National Capital Region and Mumbai Metropolitan Region reported their lowest vacancy levels in over a decade.

The report highlighted that cities like Pune, Kolkata, and Hyderabad will need stronger demand growth over the next few years to absorb the upcoming supply.

Global Capability Centres (GCCs) remained a key driver, accounting for about 40 per cent of total leasing in the quarter. The IT-BPM sector led demand with a 23 per cent share, followed by banking and financial services at 21 per cent and flexible workspaces at 18 per cent.

Looking ahead, annual office space completions are expected to stabilise at 56-58 million square feet between 2026 and 2028. This is likely to be broadly in line with demand, supporting a gradual decline in vacancy levels.

The report added that the market has shown steady recovery after concerns in early 2023 over weak demand and excess supply. A strong rebound in 2024 and continued momentum in 2025 helped drive record leasing activity and improve overall market conditions.

- ANI

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Reader Comments

P
Priya S
This is positive news for the overall economy. Stable commercial real estate signals business confidence. However, the report mentions Pune's challenge with upcoming supply. Developers there need to be cautious and not overbuild, or we'll see a local glut.
R
Rohit P
Interesting data. The 40% share for GCCs is huge! It shows India remains a top destination for global companies to set up back offices and tech centers. This is a major job creator for our skilled youth. 🇮🇳
S
Sarah B
While the headline is about stabilization, the near-term supply still outpacing demand is a concern. The report rightly points to factors like labour availability and financing. With elections and potential policy shifts, developers might face headwinds. A balanced view is necessary.
V
Vikram M
NCR and MMR at lowest vacancy in a decade is surprising given the hybrid/remote work trends. Seems companies are still betting big on physical offices. Maybe the focus is on quality spaces with better amenities to attract employees back.
K
Kavya N
As a small business owner looking for office space in Hyderabad, this "stabilization" just feels like rents are going to keep getting more expensive. Demand needs to really pick up in cities like ours to absorb all the new buildings coming up, otherwise it's tough for local enterprises.

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